Some banks have to list one-off expense for business income tax cut.
Taipei, June 9, 2010 (CENS) -- Despite its long-term benefit, the cut on business income tax rate to 17% may affect the profit margin of some Taiwanese banks this year, due to the reduction in the value of their deferred tax assets, reported Moody's yesterday (June 8).
Five banks will be affected most by the tax cut, due to their large amount of deferred tax assets deriving from their loss in previous years. They are Taiwan Business Bank, Taishin International Bank, Chang Hwa Bank, Bank SinoPac, and First Bank, which possess deferred tax assets ranging NT$3-7 billion.
Institutional investors estimated that the financial industry may have to list total loss of NT$8-10 billion, should they list reduction in deferred tax assets as current expense at one fell swoop.
Despite the one-off expense, all domestic banks will benefit from the cut on business income tax eventually, which will improve their long-tem profit margin.
Some banks will benefit from the tax cut outright this year, since they don't have deferred tax assets arising from loss carryovers.
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|Publication:||The Taiwan Economic News|
|Article Type:||Brief article|
|Date:||Jun 9, 2010|
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